The UK accounting watchdog is reviewing governance rules for audit firms as private equity investment reshapes the sector. The Financial Reporting Council (FRC) is assessing whether its audit firm governance code needs updating to address conflicts of interest from new ownership structures. Firms like Grant Thornton, majority owned by Cinven since 2024, and MHA, listed on London’s AIM market, exemplify this shift.
FRC head of supervision Anthony Barrett said the code was designed for traditional partnerships and must evolve. The review focuses on dual governance layers in externally owned firms, where parent entities may limit audit business influence. Concerns about audit quality, independence, and public interest have been raised by Iosco and Dutch regulators.
The FRC is consulting large firms on potential code changes to prevent governance gaps.
Source: Financial Times Companies · Summarized by HeadlinesBriefing